The FTSE 100 closed down more than 5pc, while Wall Street indices also fell after the US overtook China as the country with the most confirmed cases of Covid-19. The Dow Jones and S&P 500 traded around 2pc down, having climbed more than 20pc in the previous three days, a short-lived bull market fuelled by progress on US stimulus measures.

The drop was seen as a result of some investors taking profits after this week's gains, but also illustrated continued nerves about the economic fallout from the virus, and concerns about governments' abilities to combat it.

The Vix, a measure of stock market volatility often referred to as the "fear gauge", climbed sharply.

The FTSE's drop was partly linked to a rise in the pound's value against the dollar, with companies that make most of their profits abroad falling. Meanwhile, a slump in the oil price due to fears over global demand weighed on energy giants.

Markets have been propelled this week by hopes that a $2 trillion (£1.6trn) rescue plan from the US, which will massively increase loans to businesses, boost unemployment benefits and top up Americans' bank accounts with up to $1,200, would help the world's largest economy weather the crisis.

The bill was approved by the US House of Representatives on Friday, and will now been signed into law by Donald Trump. Confirmed coronavirus cases in the US now total more than 94,000.

"The mood on Wall Street is bearish but it is worth noting the US markets had a very good run the last few days," said David Madden, an analyst at CMC Markets.

"The growing rate of confirmed cases and deaths is the US is starting to creep into traders’ psyches. The bullish move we witnessed during the week was fuelled on the hope of a massive stimulus scheme, so once the package has been finalised, we might see the bears step up their action."